Alternative routes for oil exporters

Middle Eastern oil and gas producers are still scrambling to find and expand alternative routes for their exports, almost two months after the critical Strait of Hormuz was effectively shut to commercial traffic.

There is still little clarity on when or how the U.S.-Iran conflict can be brought to an end, and both sides are using the Strait of Hormuz — a vital waterway through which around 20% of the world’s oil was shipped before the war — as a bargaining chip in stop-start peace talks.

The channel’s double-blockade has supercharged global energy prices and highlighted the global energy market’s vulnerability when key waterways and “chokepoints” — like the Strait of Hormuz, Panama Canal or Suez Canal — are blocked, whether by accident or by design.

The IEA’s Executive Director Fatih Birol told CNBC Thursday he felt like a “broken record” telling countries to diversify energy supply routes years before the current crisis.

“The $110 trillion global economy can be taken hostage by a couple of hundred men with guns across a 50-kilometer stretch of strait — it doesn’t make sense at all. We should make alternative routes, alternative options,” he told CNBC’s Steve Sedgwick.

Risks around the Strait of Hormuz “were well understood” for years, Maisoon Kafafy, senior adviser to the Atlantic Council’s Middle East programs, told CNBC, but the war has shown how deep those vulnerabilities are — and the need for change.

“Hormuz has been the world’s most documented energy chokepoint for decades, and its risks were mapped, modeled, and priced into infrastructure decisions across the region,” she said.

“Until the February 2026 closure, the costs, while significant, did not reach the threshold that would justify the scale of investment alternative infrastructure requires. The deterrent architecture and economic interdependencies surrounding the strait made full closure seem too costly to any actor to contemplate seriously. The closure has demonstrated that those assumptions were breakable,” Kafafy said.

The Iran war is shifting that cost-benefit analysis, while Gulf oil producers — now highly wary of the threat posed by the Islamic Republic and fearful of being beholden to forces beyond their control in the future — are finally looking beyond the Strait of Hormuz for exports.

“The war has also accelerated investments in bypass routes. So, other countries are re-routing. That means that Iran, and its main strategic leverage, weakens,” Lucila Bonilla, lead emerging markets economist at Oxford Economics, told CNBC Tuesday.